Dance around square in native European republic (6)

I believe the answer is:

polska

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'native european republic' is the definition.
Although both the answer and definition are singular nouns, I don't understand how they can define each other.

'dance around square in' is the wordplay.
'dance' becomes 'polka' (polka is a kind of dance).
'around square' becomes 's' (abbreviation. I am not sure about the 'around' bit.).
'in' means one lot of letters goes inside another.
'polka' placed around 's' is 'POLSKA'.

Can you help me to learn more?

I've seen this clue in The Guardian.

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